Originally published in Arbitration, the Journal of CIArb, and reproduced here, in an edited form, by permission.
Put simply, it is the sole function of an arbitration tribunal to determine certain of the rights of the parties to a dispute. By 'certain of the rights' is meant those rights of the parties, each in relation only to the other, which properly are the subject of the Arbitration.
The Arbitration Award will not, of itself, determine the parties' rights in relation to third parties, to the State or States in which they reside or in which the arbitration is conducted or the subject matter lies, or to the world at large. It cannot do so, because the status of the tribunal springs solely from the compact between the parties and the jurisdiction of the tribunal devolves from the parties' submission to it. The parties' rights against others may, of course, be affected by the actions the parties take to give effect to the Award. Moreover, in certain circumstances the State courts may exercise a power to enforce the Award, in effect adopting the Award as their own.
It is submitted that these pragmatic aspects do not detract from the general proposition that the arbitration determines only rights as between the parties. Where the dispute arises in connection with a contract between the parties, then it is clear that the determination takes place in a commercial context. Where it does not, as in the case of an arbitration of a tortious matter, the context appears more akin to that of a State court. Nevertheless, it is suggested that, by agreeing to the Arbitration of a tortious matter, the parties have agreed that it shall not be treated as a suit at law but as a private matter and that the determination of it shall be a determination as between themselves alone. The arbitration agreement is a contract to compromise the tortious issue between the parties.
The task of the arbitrators is to ascertain the facts in the matter and to determine the commercial effects of those facts upon the rights of the parties each to the other.
Now, it is true, of course, that the commercial relations between the parties exist in a context of law. Indeed, it may be one of the duties of the Arbitrators to determine, for the purpose of the arbitration only, what that law might be and how it might be applicable. National laws and International law have, in a broad sense, been developed over the years to acknowledge, modify or create commercial rights as between parties one to another, as between commerce and the State and as between commerce and the wider community. In the modern world some aspects of commercial relationships can be understood only in the context of the law which properly applies to them.
Arbitrators, therefore, require to be aware of the law appropriate to the subject matter of the reference. That is hardly a surprising conclusion, as the relevant law is part of the common experience of commercial men. Now the writer should, at this point in the argument, admit to a firm prejudice. It is one of total opposition to the suggestion that the authority to act as arbitrator and to make a binding award be confined to any class of persons, licensed or otherwise. That prejudice derives directly from the axiom that the parties to a dispute have an absolute right to agree to have that dispute determined by an individual or individuals of their choice.
That is not to say that disputing parties would not be well advised to select arbitrators of appropriate skill and experience. Nor is it to say that appointing authorities should not seek to ensure suitable qualifications, whether by experience or otherwise, of those they appoint. Indeed, one reason for attempting to examine the philosophy of the arbitral process is the hope that, by examination and analysis, techniques may be developed and the skill and experience of practitioners enhanced.
Arbitration owes its long history to the tradition of merchants and to the days before the emergence of the modern nation state. Nevertheless, in many countries and commercial fields it is the custom for arbitrations to be conducted by lawyers. In others, it is still the custom for commercial men or men of technical experience to be engaged. Academics, both scientific and jurisprudential, play a considerable part. Among arbitration practitioners, a continuing argument rages, although that is perhaps too strong a word, as to the merits and demerits of these classes of individual.
It is the submission of this paper that the debate is both sterile and absurd. Insofar as the principle antithesis of the debate concerns a differentiation between those of the legal profession and others, the arguments appear to be founded on misapprehension of the arbitral process and to be aggravated by stereotyped views of the educated professions.
In this paper I wish to look at the contending views.
Those who propound the case for arbitration by commercial and technical men appear to argue first that the parties who chose arbitration have, by doing so, abjured the law and all its works, second that the lawyer has a narrow view that impairs his ability to deal with complex technical matters or to exercise the broad judgement required in commercial affairs and third that the lawyer is wedded by his profession to the methods and procedures so vividly exemplified by the case of Jarndyce v Jarndyce*1.
Let a general traverse suffice for the present. Those points will be considered after the arguments of the lawyers' proponents have been set out in brief. They appear to be first that the procedures of the law are complex and the pitfalls cannot be understood except by the lawyer, second that the examination of witnesses and the assessment of evidence is in the exclusive competence of the courts and those who practice in them, third that it would be impracticable for an Award drawn without the lawyers' special knowledge of the law to have the intended and proper commercial effect. As to the academics, their opponents tend to point to the practical difficulties, such as their lack of availability other than in vacation, as well as to a general proposition of unworldliness.
Other arguments which see the light of day from time to time are, in general, developments of those set out.
Before turning to the consideration of the views I have noted, there is a special class of arbitration which needs to be identified and distinguished.
There are disputes which turn solely upon important issues of law, which have not been fully developed in the Courts and whose resolution is likely to be of importance in the development of law, whether national or international. There are others in which such issues are embedded in other matters.
It may be, in an international context, that because of difficulties of recognition of judgements, only arbitration is available to deal with such issues. It may be, in a national context that, whether for reasons of expedition, confidentiality or otherwise, arbitration is the preferred method of determination. Particularly where the issues of law are capable of separation, it appears self-evident that those issues should be tried by a suitably senior judge or judges, perhaps of differing nationalities, as judge-arbitrators. Such a tribunal might well include one or more academic lawyers, although it might be more productive if the arguments were presented by academic lawyers for the decision of the perhaps more pragmatic judges. Such a rarefied arbitration might have no place for those of other skills, unless it be as an assessors or as investigators and reporters of fact, to strip the factual material and lay the legal issues bare.
That special class, of what may be called legal Arbitration, together with political arbitration, such as might be employed to deal with borders or with political rights, can and should be distinguished from the generality of commercial arbitration. I suggest there is no difficulty about that, at least in theory.
Now, to return to the points set out above in the context of what I would describe as the inter- professional debate:
1. The parties, by choosing arbitration, have chosen to exclude lawyers as arbitrators.
This view is not tenable for several reasons. Although theory resists the proposition that those who enter into contracts with an arbitration clause do not necessarily intend to have recourse to arbitration exclusively, nor to be bound by it, the fact must be recognised that parties are not always aware of the effects of entering into such a contract. They may well be unaware of any special implications of their choice of Arbitration Clause. Arbitration may come to them as a surprise.
Nevertheless, I distinguish between the proposition that I have noted, that choosing arbitration of itself excludes lawyer arbitrators, a proposition I challenge, with another, unrelated proposition that by choosing arbitration, parties have elected to exclude the methods of the Court, a proposition favoured by some jurisdictions and which has nothing to do with the choice of persons. That is for discussion elsewhere.
English Law has, tucked away in the crevices of its precedents, several cases where the arbitration clause of a party included the words 'the Arbitrators shall be commercial men' or words of like effect. Donaldson J, in Pando Comparia Naviera S.A. v Filmo S.A.S. (Q.B.D. 1975), considered that the words 'commercial men' were apt to exclude those whose experience was as practising members of the legal profession. Indeed, he went on to say that, while a "commercial lawyer" served the commercial world he was not of it. Nevertheless, of a distinguished Arbitrator who had ceased to practice as a commercial lawyer, Donaldson J. said that the fact of his having been a lawyer could not disqualify him from becoming a "commercial man" thereafter, if he would otherwise be qualified.
The precise logic of English Law is, of course, an integral whole. Extracts from it, like some fine wines, do not always travel well. Nevertheless, it may be reasonable to cite this one example in support of a general proposition that, if an arbitration agreement is to exclude a specific class of individual, it must do so in terms. By abjuring the courts and the processes of law, the parties have not chosen to exclude lawyers from their choice of Arbitrators.
As to how a lawyer should conduct the arbitration, that is another matter.
back to list of points
2. That the lawyer has a narrow view that impairs his ability to deal with complex technical matters or to exercise the broad judgement required in commercial affairs.
This argument has two limbs and each must be met.
As to technical matters, it must be true that the lawyer is unlikely to have the special knowledge of the engineer or scientist. If the arbitration is one in which the final authority for appointment is, for example, a recognised technical Institution or scientific body, then there may be a prima facie argument that the parties did not expect a lawyer to serve them as Arbitrator, but appointors have discretion.
No doubt a lawyer will approach an arbitration involving technical matters in a matter different to that likely to be adopted by a technical man. The latter might well approach the arbitration as if it were the nature of an Enquiry. The lawyer, however, would expect the assistance of expert witnesses, or perhaps of his own expert assessor, or of his own expert for enquiry and report.
In the common law jurisdiction, the tendency would be to look solely towards experts retained by the parties perhaps with an assessor for especially difficult matters. In the civil law jurisdictions, there may or may not be experts retained by the parties, but the use of an expert appointed by the arbitrators is not uncommon. The choice reflects a difference between the respective cultures and customs. Such methods, which are perfectly appropriate in arbitration, serve to bring additional professional skills to the determination of the issues.
As to commercial affairs, it has been shown in the context of an earlier point that there may be a distinction to be made between a practising lawyer and a "commercial man". Nevertheless, the modern commercial lawyer, domestic or international, is knowledgable to a degree which must be more than sufficient for arbitration.
Moreover, the facility for obtaining expert advice or assistance as to custom or practice, by methods similar to those used for technical issues, remains available. It should also be said that the stereotype of the lawyer as a narrow-minded man of books is as absurd as any of the stereotypes which seem to abound in this debate.
back to list of points
3. That the lawyer is committed to the forms of legal procedure.
This point needs to be considered with some care, because it is easy to confuse it with two others:
(a) There are two schools of thought among arbitration practitioners:- one that it is proper for arbitration to be considered as if it were a process of law to be conducted as a procedure of the appropriate court; the other that an arbitrator should be free, within self-evident bounds, to proceed as he thinks fit having regard to the matters in the reference.
(b) That lawyers representing the parties to an arbitration may seek to press an arbitrator to adopt a simulacrum of the procedure of a court, in order to obtain advantage in cost or delay to the benefit of a reluctant or affluent client, or that such a lawyer may seek so to press for the sake of adopting the procedure with which he is familiar.
As to the first, both schools of thought are to be respected, although it will have been observed that the author favours the concept of arbitral freedom. Students of the English scene may have noted that the avowed purpose of the Arbitration Act 1996 is one of party autonomy but seeks to penalise arbitrators who do not control the autonomous parties.
As to the second, it is not relevant to the choice of arbitrators. An experienced technical or commercial arbitrator is as well able to deal with the parties' representatives as is a lawyer experienced in arbitration. A less experienced arbitrator, lawyer or such, might have some difficulties, but that is part of the task.
Certainly, the lawyer in doubt may well look to his own knowledge of procedure to deal with a specific problem. He may believe that the procedures of the state courts of the jurisdiction are well suited to the reference. Nevertheless, lawyers have shown themselves to be among the most innovative in the development of techniques to expedite the resolution of issues. It was an English Official Referee (a Judge appointed to deal specifically with cases having predominantly technical aspects) who suggested that an expert witness, attending another court on a matter of priority, might be cross-examined by telephone and a note made of his answers for the Court.
Perhaps it should also be said that there are non-lawyers, as well as lawyers, who allow the dead hand of an excessively formal procedure to bring arbitration to a near stop, greatly to the discredit of the arbitral process as a whole.
back to list of points
Now, turning to the points made for the exclusive jurisdiction of lawyers, that is to say against the involvement of non--lawyers, if such a class can be defined, perhaps one may resolve them in like manner.
4. That the procedures of the law are complex and the pitfalls understood only by lawyers
In some jurisdictions, the procedures of the State courts can be complex and perplexing to the layman who has not encountered them before. At one time a suitor at law in England could fail if his writ had not been taken out according to the appropriate form of action. The Common Law was peculiarly literal in its application and it became necessary to adapt it, principally to meet the rising expectations of the people.
The necessity for specifying a form of action was discarded in England following the Real Property Limitation Act 1833 and the Common Law Procedure Act 1852. The final abolition of the formalities of pleading according to a form of action took place in the Judicature Acts 1873-1875. Nevertheless, not only was one commentator able to write, as late as 1916, "The forms of action we have buried but they still rule us from their graves*2, those very words are often cited today. Formality rules.
Other jurisdictions, both Common and Civil, have their own complexities, mostly developed to suit the operation of the Courts, who have to deal constantly with matters that are both many and various. Procedure at Law is a matter of national and professional idiosyncrasy.
The same need not be true of arbitration. Insofar as there can be said to be Arbitration Law, it is concerned with the intervention of the Courts in the arbitral process, rather than with the process itself. In almost every jurisdiction, the law provides more or less for the enforcement of agreements between parties that they will abide by the decision of another rather than go to law. That other is generally bound to adopt the principles of natural justice (or with the concept of natural justice as it is understood in the jurisdiction) and to eschew bias and prejudice.
He, the arbitrator, is not bound to forms of procedure (except where certain arbitration rules apply - and that is a matter of commercial agreement, not of procedure at law). Indeed, it might be argued that lawyers, by dint of their training is the procedures of the State Courts, do not have the repertoire of techniques and procedures that are available to others, such as scientists.
As to the substantive issues, it has been observed already that businessmen and professionals operate everyday in an environment of substantive law, which governs their day to day actions. In commerce, that substantive law is largely based on the practice of merchants and others, so that much is intuitive and much is what the student of Natural law would expect. Where it is not, there is likely to be a knotty matter to resolve but logic is likely to be as useful as law in that resolution.
In international disputes, the procedural difficulties that face an arbitrator whose training has fixed him with the methods and procedures of his own State Courts, are considerable. The intelligent layman, approaching the matter with a mind that is tabula rasa, may be found better able to cope, particularly if there are practical issues to which his personal skills may be applied. At the ICCA conference in Seoul in 1996, it was said that some non-lawyers might be able to approach arbitral issues without the "Bag and Baggage" of the pre-conceptions of law inevitably carried by the lawyer as a consequence of his professional formation.
back to list of points
5. That the examination of witnesses and the assessment of evidence is in the exclusive competence of the Courts and those who practice in them.
This proposition is so self-evidently false that it deserves little attention. The disciplines of science and mathematics examine evidence with greater rigour and precision than does the discipline of law.
The idea that the demeanour of a witness is an infallible guide to his or her veracity is a relic of the days of trial by ordeal, which should not have survived the Lateran Council of 1215, when Pope Innocent III forbade the conduct of ceremonial by clergy at such trials. In the 17th Century, Shakespeare recognised that 'there's no art to find the mind's construction in the face *3."
In fact, of course, the analysis of evidence is a matter of logic. The weight to be given to it is a matter both of logic and of judgement, judgement born of experience. In the State Courts, various rules of evidence have been described, either to make certain processes, such as the exclusion of some kinds of hearsay, automatic, to simplify the work of the Courts and make its processes clear, particularly when there is a tradition of jury trial.
None of that is relevant to an Arbitration, where the arbitrator must be trusted to use his judgement in giving weight and credence to the evidence he is given (or that he may discover - but that is a broader issue).
The development and application of logic is a matter, not of law, but of philosophy. Scientists and engineers, whose entire corpus of knowledge is built upon the methodical deduction of general principles from experimental evidence and logical argument are very aware of the nature of what is conclusive evidence (at least within the scope of human knowledge) what is evidence as to what is probable and what is not evidence at all. They are accustomed to look critically at the provenance of evidence and at the nature of corroboration. If there is a difference between the scientific and the legal approach it is that the scientific approach relies on relatively simple rules that are more or less axiomatic and weighs all evidence in the light of those rules, while the legal approach relies on a more complex system of rules by which only a restricted class of evidence requires to be considered at all.
The problem with such complex sets of rules is that they are continually in a state of change according to current perceptions of what is necessary in the practical context. By way of example, various types of document, telex, written letter, copy, facsimile transmissions, signed and witnessed deeds, may or may not be admissible in courts of law for particular purposes. That is a matter of law. It may have to do with their respective probative value, the possibility of forgery or the certainty of receipt. The reason is of no consequence, admissibility at law is a matter of rule (although a measure of discretion may be available). Those that are not admissible are not part of the evidence. By contrast, in scientific analysis, all that is available is evidence, to be eliminated or not on its own merits. The possibility of forgery might not, of itself, eliminate a document. It might cause a low weight to be assigned to the document, or it might lead to a request for some corroborative material.
In practice, of course there is very little difference between the two approaches as far as the determination of fact is concerned. Intuitively, the scientist or engineer will dismiss from his mind evidence that negative probative value and it is that evidence that the lawyer would tend not to admit.
I do not here refer to the special case of evidence which has to be of a particular kind to have a particular legal effect, such as a requirement for certain transactions to be recorded in writing. That is not a matter of weight alone, it is a matter of a criterion to be met. In general such requirements are the subject of the applicable substantive law, rather than of rules of evidence.
Evidence is not, in this writer's submission, a concept solely of law. Insofar as it is a route to the development of knowledge, perhaps it could be described properly as a concept of epistemology. More practically, I suggest that it is to be seen as a fundamental philosophical and scientific concept common to the educated professions. If there is a criticism to be made of the scientific approach, it is that it requires a greater degree of certainty in establishing a structure of evidence upon a basis of fact than does the legal approach which may be limited to what the proponents of a case may choose to offer. It may be that the scientist's natural approach is a little closer to that of the civil lawyer to that of the common lawyer. His instincts are, after all, investigative. Nevertheless, no one familiar with the spectacle of scientists or engineers in discussion would suggest that there is no adversarial element in their methods of testing the truth of new propositions.
back to list of points
6. That an Award, unless drawn in special legal terms, cannot have the intended legal and commercial effect.
The effect of this proposition would contradict the axiom that the parties have the right to agree to be bound by the determination of an individual of their choice. What is required of an Award is that it should be clear and unequivocal, and that it should express what is to be done, by whom and within what period of time.
That will not usually require the use of legal terms of art. In England, a jurisdiction which boasts a fair degree of complexity in its legal system and a history of respect for due form, the principles were re-stated by Donaldson L.J., following the introduction of the Arbitration Act 1979, which provided inter alia for reasoned Awards to be given in certain circumstances. "No particular form of award is required .... all that is necessary is that the Arbitrators should set out what, on their view of the evidence, did or did not happen, and should explain succinctly why in the light of what happened, they have reached their decision and what that decision is *4." In a word, commonsense.
The position is not quite as free and easy as that. There are legal requirements which must be met if an International award is to be enforceable under the New York Convention*5, and there are similar requirements to be observed under various sets of arbitration rules. Some jurisdictions require an Award to be notarised. None of those points, however, is so esoteric as to present a problem for an experienced expert arbitrator.
back to list of points
The argument, as to who should be the Arbitrators, continues.
Each candidate has merits: the practising lawyer, the engineer/architect, the academic lawyer, the retired judge, the research scientist, the priest, the accountant, the philosopher - even the professional arbitrator.
The decision, to be made by the parties or by appointing authorities, is a pragmatic one. Who will be able to conduct the reference with fairness and dispatch, understanding the parties and their problems to produce a sound award?
I submit that the conclusion of this paper is that there is a wide choice and that justice is by no means the preserve of any single class or profession but an aspiration for us all.
back to top
References *returns to text.
Charles Dickens, Bleak House.*
Maitland, Equity (1916 Edition) p.296.*
William Shakespeare, Macbeth, Act iv, Sc. iii *
Bremer Handelsgesellschaft mbH v. Westzucker GmbH (No.2); Westzucker GmbH v. Bunge GmbH (1981) Lloyds' Rep. 130, CA *
The New York Convention on Foreign Arbitral Awards 1958 - Click for a copy of the full text. *